Provincial Government

BC’s provincial government has a key role to play in shaping the province’s economy. Taxation, access to natural resources, transportation, education and skills development, environmental regulation, labour rules and many other social programs all fall under the provincial government’s jurisdiction. The Council conducts research and analysis on all these topics and regularly contributes to public-policy development at the provincial level.

To build a more prosperous economy, new businesses have to be created and some existing firms must grow. The business world is characterized by a high degree of “churn,” with many new entrants together with lots of exits and diverse patterns of expansion and contraction among the pool of surviving companies. Many new firms don’t have a long shelf life. About half close their doors within five years. Of those that hit the five-year mark, most never reach the 50-employee level.

But those that do grow swiftly tend to make disproportionate contributions to our economy. This is partly because as businesses expand, they become more productive – and therefore, on average, pay higher wages. In addition, as firms grow, they are more likely to export and to take advantage of the economies of scale that come from doing business beyond local markets.

Having considered the evidence, including the BC Utilities Commission’s (BCUC) recent report, our reputational risk and the anticipated significant electricity demand as we accelerate into the digital age and low carbon economy, we offer our support for completing the project, for several reasons – some of which are also referenced in a recent submission from the BC Building Trades unions.

Canada is a federation made up of provinces and territories with a significant amount of subnational autonomy. The provinces are responsible for delivering health care and education and have jurisdiction over employment standards and occupational regulations governing the labour market. Control of Crown land and regulating the operations of resource industries are also under provincial jurisdiction. Although independent, the provinces co-operate and are integrated and interdependent with each other in an economic sense. The two westernmost provinces, B.C. and Alberta, have especially strong economic connections and exhibit a high degree of economic interdependence.

p>The $52 billion “mini-budget” presented by Finance Minister Carole James on September 11 signals a shift in the priorities of the provincial government after 16 years of generally tight-fisted rule by the BC Liberals. For the finance minister and her BC NDP colleagues, it is time to boost expenditures on social services, education and affordable housing – while still keeping the operating budget in surplus. Skinny surpluses in the range of $250 million are projected for each of the next three years, on the heels of the $2.7 billion torrent of black ink posted in 2016-17.

The new B.C. NDP government campaigned vociferously during the election that it would use every tool in its “tool kit” to stop an interprovincial pipeline expansion that is clearly within the sole jurisdiction of the federal government. There can be no doubt about the new government’s position and its overriding animus to the pipeline project.

As a new B.C. provincial government gets ready to assume office, there is an opportunity for a fresh agenda and new perspectives. The BC NDP government will inherit an economy that has been outpacing the rest of the country in the growth of overall output, employment and consumer spending. However, B.C. also faces several structural challenges that in some ways belie the happy picture of robust economic growth. These challenges include excessive reliance on a frothy housing market and outsized real estate sector; alarming levels of household debt; tepid productivity growth; sluggish business investment; waning competitiveness in some key segments of the province’s export economy; and a housing affordability crisis that is affecting many parts of the Lower Mainland.

In these circumstances, the new government will need to proceed carefully in defining and implementing its policy agenda.

The BC economy remains healthy, with nearly all sectors contributing to the ongoing expansion. The momentum from last year is carrying forward more so than previously anticipated, prompting us to adjust our 2017 forecast upwards.

Two factors will largely determine the future trajectory of economic growth in British Columbia: productivity performance, and the extent to which the labour force expands over time. The hurdles to achieving long-term economic growth include an aging population, a low natural birth rate, and intense global competition for talent and capital.

Urbanization Feeds DivergenceThe outlook for economic growth across B.C. is not uniform. In fact, ongoing urbanization and regional gaps in economic opportunity are feeding into a story of two increasingly diverging economies in the province.

The rules governing trade with, and access to, Canada’s first and third largest trading partners have come under attack – threatening two decades of growth and prosperity in western Canada.

For the citizens and businesses of western Canada, it is crucial that their governments, individually and collectively, take the lead to assure that unique western interests are represented in determining the future rules for trade in North America.

Providing the next generation with opportunities to acquire the right skills contributes to stronger economic and productivity growth and should be a top-of-mind goal for incoming decision-makers. All three parties contesting the May 9 election have made promises regarding post-secondary education and innovation.

Real estate, home prices, rental units and affordability figure prominently in all three party platforms. Each party has developed a substantial narrative around housing/housing affordability, with each platform proposing several housing-related policy measures or new/revised programs.

So far, the provincial election campaign has focused on issues such as housing, jobs, health care, education, social services and transportation. These all matter to voters, of course, but several other topics that have received little attention to date are also important in shaping B.C.’s long-term economic prosperity. One is export competitiveness.

In a small jurisdiction like B.C., the ability to raise real incomes over time depends in large part on whether we can increase exports and stimulate the growth of export-capable industries. Successful export industries produce many benefits, including furnishing the income that allows us to pay for imports. Most export industries also offer above-average wages and salaries.

Immigration continues to reshape the demographic landscape in British Columbia.

Every year, between 35,000 and 40,000 new immigrants arrive in the province. Currently, more than one-quarter of the province’s population is foreign-born. Most immigrants settle in urban centres, so 41% of Metro Vancouver’s residents were born in another country. Given relatively low birth rates and the aging of the population, these proportions are expected to rise over the coming decades.

Parsing the details of the Liberal government’s 2017 budget offers a number of insights into British Columbia’s $270 billion economy. The first and most significant is the advantage conferred by economic and industrial diversification.

Budget 2017 is a good news budget. While it falls shy of being a “something-for-everyone” document, it does announce some useful tax/premium reductions along with increased spending in a number of high priority areas. It also extends the province’s track record of sound fiscal management. Apart from the risk stemming from the high debt load of certain Crown corporations, Tuesday’s budget reinforces BC’s top notch credit rating.